De Beers Chain to Nearly Double This Year

June 1, 2006byRob Bates

De Beers’ retail chain will almost double its stores this year, from nine to 17, and it’s eyeing additional locations in the United States, company chairman Guy Leymarie told JCK in an exclusive interview.

Among the new 2006 locations: two in the Middle East (Dubai, United Arab Emirates, and Kuwait); four in Japan; one in Taipei, Taiwan; and one in London. Additional U.S. locations are being considered, but Leymarie couldn’t be more specific. Currently the chain has stores in New York and London. Both opened last year.

The De Beers stores have had a mixed track record, as even managing director Gary Ralfe admitted in a recent phone conference following release of De Beers’ financial results. “[The results have] been so far disappointing,” he said. “It has not recorded the kind of instant results that we like to see. It clearly takes more than the name of De Beers for the diamond jewelry to fall off the shelves. … There were certain shortcomings in jewelry design and marketing.” But he thought the chain has turned a corner, noting it had a 61 percent increase in sales in 2005, to about $30 million. “We are looking for further fairly significant growth this year,” he said.

Leymarie was similarly upbeat, noting that even the much-derided wood-draped flagship store on London’s Bond Street is now making money. And the chain has its first bona fide hit—the Talisman collection, which features a mix of rough and polished stones. Leymarie says it fulfills the chain’s goal of bringing original concepts to the diamond-jewelry arena. The recently opened store in France has also exceeded expectations.

As for the two American stores, Leymarie says they are “doing well,” but he wasn’t more specific. One thing that could change is the chain’s U.S. advertising, with its eerie—and, to some eyes, unsettling—pre-Raphaelite imagery. The ads were “very arty and very European,” Leymarie says. “People [in the United States] felt the girl was too young, too pale. But at least people spoke about it.” He feels that ultimately “word of mouth” will mean more than advertising.

Leymarie notes wryly that one problem the chain has had is that it’s drawn an unusual level of “shoppers” who are actually curious people from the trade. “For salespeople it’s very frustrating,” he says, “because they have to be polite to everyone, but these people take time away from the real customers.”

One interesting thing behind the scenes is De Beers’ ongoing attempts to settle its legal problems, which have apparently gained steam in recent months, with frequent visits of De Beers executives to Washington, D.C. Leymarie says he’s not sure De Beers’ antitrust status will make a difference for De Beers L.V., noting that the chain has already opened two stores in America. He does say that now-retired managing director Gary Ralfe was able to visit the De Beers store in Los Angeles last year. Although he did not attend its opening, it was his first trip to the United States in decades. But might a new situation cause De Beers to take a more direct role in the store—it’s now only a “passive investor”—or lead the store to become a sightholder, as other retailers have done?

“When the [antitrust] problem is solved, it’s for everyone’s benefit,” Leymarie says. “But I’m not so sure [becoming vertically integrated] will make sense at this stage of the company.”